Interview with: Katsumasa Suzuki, Partner
Mori Hamada & Matsumoto | View firm profile
Katsumasa Suzuki, Partner at Mori Hamada & Matsumoto, sits down with The Legal 500 to discuss his induction into The Legal 500’s Hall of Fame and what he believes to be the biggest challenge for clients over the next 12 months
What has been your greatest achievement, in a professional and personal capability?
In a professional capacity, I am proud of my long-term contribution towards developing the No.1 capital markets team in Japan. I have advised clients on almost all “Equity Capital Markets Deal of the Year” transactions over many years, as well as on many first-ever transactions in the market such as the first rights offering, the first listing of Japanese Depositary Receipts by foreign private issuers, the first simultaneous IPO of a parent holding corporation and its subsidiaries, and the first public offering of non-voting preference stock by a listed corporation. I have continuously published many newsletters and articles on thought provoking topics to share my knowledge and expertise with our clients and the regulators. It has been an honour to lead discussions on how to achieve sound and sustainable growth of the Japanese capital markets. Through gaining experience of major and/or innovative deals and thought leadership, we have built firm relationships with blue-chip issuers, major investment banks, leading law firms and governmental authorities. Internally, to increase the competitiveness of the team, I have spent substantial time in team-building by attracting many young and excellent lawyers, frequently conducting one-on-one meetings with them and enhancing efficiency of our operation through active usage of technologies.
On a personal level, it is great to have a three-year-old girl, Sarah, and one-year-old boy, Kantaro, thanks to my wife. They have given me another meaning in my life.
What do you do differently from your peers in the industry?
In Japan, traditionally most business lawyers provide only “pure” legal advice. They know the law, precedent cases and academic discussions very well, but do not try to understand accounting, markets and other business matters. They may consider that these areas were outside of the lawyers’ role. I have felt this was wrong since I was a junior associate, because even though such lawyers may be appreciated by traditional legal departments of Japanese corporations, they cannot be invited to join in management discussions when important business decisions are being made or discussions with investment bankers when they are designing a new product or scheme. I have always dedicated a lot of time to understand business and financial matters and perhaps, I am the first Japanese lawyer to hold a Japanese securities analyst licence . Of course, I still provide legal advice to my clients, but my advice is based on not only legal knowledge, but also a deep understanding of accounting, markets and business so that my advice is clearly differentiated from many other lawyers and is of higher value to management teams.
Furthermore, business lawyers in Japan tend to focus on only one practice area. For example, the capital markets practice in Japan is dominated by several leading lawyers, but it is very rare to come across them in the area of M&A. However, I feel that both finance and investment are inseparable business activities. For example, a knowledge of both the dynamics of negotiations in M&A, and disclosure in capital markets is helpful when working in either practice area. If deal lawyers do not have enough experience in governmental investigations, litigation or arbitration, they will not be able to accurately analyse real legal risk. I spend almost one-third of my billable hours in each of equity capital markets, M&A, and corporate crisis matters and have been able to achieve a market leading reputation in all areas. This approach has enhanced the quality of my legal advice and allowed me to be able to adapt to changes in the business environment, which is very important in the highly volatile business world in which we are living.
Lastly, I always try to be innovative. Many deal lawyers focus on theoretical issues from unreasonably conservative views and do not develop skills to find practical solutions, which is what clients require. It is useful to point out risk but to provide clients with more value we need to analyse the real possibilities of what the impact is of such risk based on an understanding of laws, precedents, and regulatory views. More importantly, we remain committed to creating innovative solutions to meet our clients’ evolving needs. I have built a wide network which includes lawyers, investment banks, investment funds, CEOs and CFOs, academic scholars, and regulators in and outside of Japan by official and casual discussion with them, my active involvement in the International Bar Association and the secondment of team members to clients and regulators. Through such a network, my team and I are able to gain valuable information, enabling us to develop novel schemes and approaches which are firsts in the legal market.
What advice would you give to your younger self?
I am still young! So, I need to give advice to my current self here.
I believe that we lawyers should be logical, fair and passionate.
Logical thinking is the core competence of business lawyers. A client can easily obtain information on laws and regulations through the internet, but it is our job to apply the laws to the reality which our clients are facing and help them to find feasible, practicable and reasonable solutions so that they can achieve their business objectives. We can only do that if we understand the law and their business. We must support clients in making sound business decisions based on reliable logic.
Our advice should be always fair. Lawyers are sometimes led to conclusions which may not serve the best long term commercial objectives of their clients by focusing too much on technical legal arguments.However, if we look at the big picture of what we are seeking to achieve for our clients , we can reach a fair and well-balanced conclusion which will be appreciated by clients.
Passion is essential for all professionals. Without it, we cannot achieve any great goals nor be satisfied with what we have achieved in our business life.
Can you give me a practical example of how you helped a client add value to the business?
I am proud to have been recognized as the most innovative lawyer in Japanese capital markets. We should always innovate to find new ways to add value to a client’s business. For example, I created the first rights offering scheme in Japan in 2010. Before the first rights offering deal was completed, Japanese corporations were criticized by foreign investors for conducting large-sized equity finance by public offerings or third-party allotments which caused the equity stake held by investors to be diluted.
Introducing rights offerings to the market made it possible for investors to mitigate or avoid the dilutive effect caused by the issuance of new shares. I discussed this with the Financial Services Agency, Tokyo Stock Exchange and JASDEC and successfully changed the relevant rules and governmental interpretation. We therefore created a new alternative for equity finance. Many Japanese corporations were subsequently able to conduct large equity financings to support their growth by holding a rights offering thereby avoiding criticism from investors.
In the area of M&A, I advised a listed subsidiary of a leading international electrical goods manufacturer in its squeeze-out deal. The deal was very challenging due to a significant divergence of views on the purpose and pricing between the target subsidiary and the acquirer. I engaged in extensive discussions with the CEO and the CFO of the target subsidiary. After tough negotiations, the parties reached an agreement and the deal was successfully completed. Several years later, the CEO and the CFO of the target subsidiary became the CEO and the CFO of the parent company, contributing to the recovery of the financial results of the group.
Within your sector, what do you think will be the biggest challenge for clients over the next 12 months?
Clearly, the biggest challenge for clients now is the Covid-19 pandemic. The extensive limitations on face to face communication and commercial activity in general is causing serious damage to the financial performance of many corporations, and the rapid and sharp decline of stock prices. Management teams will have to deals with financial difficulties. As a result, they may need to consider lay-offs and substantial reorganizations. In worse case scenarios some business may face bankruptcy or insolvency proceedings. On the other hand, activist shareholders may increase pressure on managements by requesting the repurchase of shares or a change of directors. We have already provided many clients with advice relating to the Covid-19 situation and expect that clients’ needs will increase in the coming several months.
In the longer term, clients need to adapt to increasing technological change to ensure the success of their businesses and to the decline of traditional markets due to a progressively aging society. Clients need to improve labour productivity, which is not easy to enhance even with new technology given the long established business culture and customs.